CRA Regulatory Compliance & Corporate Governance 2

Question 1

Under the Sarbanes-Oxley Act, which section specifically requires CEOs and CFOs to certify the accuracy of financial reports?

Accepted Answer

Section 302

Answer

Section 302 of SOX requires principal executives to personally certify quarterly and annual financial reports filed with the SEC.

Question 2

The 'three lines of defense' model assigns risk management functions to business units, risk/compliance functions, and which third line?

Accepted Answer

Internal audit

Answer

Internal audit serves as the third line of defense, providing independent assurance that the first and second lines are functioning effectively.

Question 3

Which regulatory framework is primarily used by U.S. publicly traded companies to evaluate internal controls over financial reporting?

Accepted Answer

COSO Internal Control — Integrated Framework

Answer

The COSO Internal Control — Integrated Framework is the standard most widely used for evaluating ICFR under SOX Section 404 requirements.

Question 4

A company's audit committee is best described as a committee of the:

Accepted Answer

Board of directors

Answer

The audit committee is a subcommittee of the board of directors responsible for overseeing financial reporting and the external audit process.

Question 5

Which principle of corporate governance requires that boards consist of a sufficient number of independent directors to avoid conflicts of interest?

Accepted Answer

Independence

Answer

Independence is a core governance principle ensuring directors can exercise objective judgment free from conflicts of interest.

(CRA) Certified Risk Analyst Practice Test